Cloud TV Market Trends

Growth Drivers

• Proliferation of smart devices and connected TVs: The proliferation of smart devices and connected TVs leads to an improved consumer experience by widening the scope of content available, thereby impacting the demand for cloud TV services. A major factor in the market’s expansion is the proliferation of smart devices across the world. Opportunities are rife in regional markets with customer bases with high or increasing disposable income. The surge in subscriptions to OTT (over-the-top) platforms clearly shows that consumers are moving away from traditional cable in favor of more flexible, internet-based viewing options. This shift leads to an improved consumer experience by widening the scope of content available and thereby impacting the demand for cloud TV services.
  The latest Residential Energy Consumption Survey (RECS) by the U.S. Energy Information Administration in May 2022 shows a clear shift in how Americans connect their TVs. In 2020, 56% of U.S. households had at least one internet streaming device, nearly doubling from 29% in 2015. At the same time, 56% of homes relied on a set-top box in 2020, down from 76% five years earlier. Interestingly, about 27% of households used both a streaming device and a set-top box in 2020, a modest increase from 21% in 2015.
• Advancements in 5G and edge computing: The rise of 5G is a significant factor driving the cloud TV market's growth curve. A key factor has been the integration of mobile edge computing (MEC) to shift data processing closer to the users. This allows a reduction of lag, leading to improved streaming. Additionally, the industry is dependent on providing lag-free streaming, and increased buffering curtails user retention. For cloud TV platforms trying to deliver smoother playback while juggling growing traffic, the integration of 5G and MEC serves as a major development. The table below highlights 5G deployment trends that are converging with the demand for cloud TVs.

Challenges

• Bandwidth and network infrastructure limitations: Although the adoption rates of cloud TV have surged, an impediment has arisen from inconsistency in broadband infrastructure. The constraint is especially visible in emerging markets. As per the International Telecommunication Union (ITU), by the end of 2023, more than 2.6 billion people lacked internet access globally, which had curtailed the reach of cloud TV platforms. Additionally, the fluctuation of network speeds in emerging economies, where 5G deployment is comparatively slow, creates a high churn rate in trial users of OTT-based streaming services. But despite the challenge, the current trends of heightened 5G deployment are set to navigate the constraint successfully by the end of 2037.
• Rising content licensing and cloud hosting costs: The cloud TV providers have faced mounting constraints due to operational costs. The rising costs are associated with content licensing. The increasing expenses cause impediments in the scalability of cloud TV platforms for mid-sized operators.